Shadow Town, situated on Nar Shaddaa, was established during the era of the Cold War. While appearing as a typical impoverished area, its residents were far from ordinary. Rather than being populated by underworld figures or influential Hutts, it served as a prison for individuals deemed valuable yet untrustworthy by the Sith Empire, but not expendable enough to be eliminated. This locale held inhabitants such as scientists, assassins, and subjects of genetic experimentation. Notably, Watcher X, formerly a high-ranking official within Imperial Intelligence, was among those confined. The Empire enlisted top-tier intellects, including Tharan Cedrax, to build this establishment. To regulate the inhabitants' movements, cranial implants were installed, programmed to detonate upon crossing Shadow Town's boundaries, resulting in the prisoner's death.
Furthermore, supplementary detention facilities existed, staffed by Imperial personnel, for prisoners requiring a state of enforced passivity. A number of these inhabitants adapted positively to their confinement and premature retirement. Instead, they chose to collaborate with the Imperial authorities, leading comparatively normal lives, despite the fact that those around them would run away if they had the chance. The Hutt Cartel received a substantial payment to oversee Shadow Town, with the significant compensation outweighing the inherent risks of housing prisoners that even the Empire itself was wary of keeping within its dominion.